Intel Swings Job Ax

Updated from Sept. 5

Intel(INTC - Cramer's Take - Stockpickr) announced restructuring plans Tuesday that it says will save the company $2 billion in 2007 and $3 billion in 2008.

The move will reduce Intel's workforce by roughly 10% by the middle of next year from the 102,500 employees on the Santa Clara, Calif., company's payroll at the end of the second quarter.

According to Intel, the company's headcount will come down to 95,000 by the end of this year, and roughly 92,000 by mid-2007.

The cuts are the most significant result of a 90-day review that Intel announced earlier this year with an intention to "restructure, resize and repurpose" the chipmaker.

In June, Intel announced that it was selling its communications and applications processor business to Marvell(MRVL - Cramer's Take - Stockpickr) in a $600 million deal. A month later, Intel said it was laying off 1,000 managers.

Shares of Intel were off 1.9%, or 37 cents, to $19.61 in recent extended trading.

Rumors have been rampant for several days that Intel was on the verge of axing as many as 20,000 employees.

According to Tuesday's announcement, the new headcount targets include Intel's previously announced actions such as its sale of the 1,400-person application and communication processor business to Marvell.

Intel spokesperson Chuck Mulloy said about 5,000 workers have already left or are in the process of leaving the company through previous actions as well as attrition, meaning that about 2,500 people will be laid off between now and the end of the year. The remaining 3,000 jobs will be eliminated in the first half of 2007.